China has signed a $13 billion contract to build a railway network in Iran, where economic sanctions have hampered investment by western companies, Iran's state infrastructure company said on its website.

'The contract to build a railway network extending 5,300 km was signed when a Chinese delegation visited Tehran,' the Construction and Development of Transportation Infrastructure Company said in a posting dated Monday.

It did not say when the contract was signed or when work would start.

China, the second biggest buyer of Iranian oil, after Japan, has long been involved in infrastructure projects in Iran, such as the building of Tehran's metro.

As a permanent member of the United Nations Security Council, China voted in favour of a fourth round of UN sanctions on Iran last June, aimed at pressuring Tehran to curb a nuclear programme it says is entirely peaceful, but which many countries fear might lead it to making atomic bombs.

China has backed Iran's right to peaceful nuclear power and has in the past expressed displeasure at sanctions proposals hitting Iran's energy sector, saying that it does not view such measures as the 'fundamental solution' to the dispute.

Direct trade between the two countries is worth $30 billion, the head of the Iran-China Joint Chamber of Commerce, said on its website. In addition to that is $7 billion of indirect trade via the UAE, it said.

The Iranian infrastructure company also said memoranda of understanding had been signed with Turkish and Russian companies for road and rail projects but gave no details.-Reuters